Skip to main content

tv   Real Money With Ali Velshi  Al Jazeera  August 1, 2014 2:00am-3:01am EDT

2:00 am
coming up friday on "consider this". the u.s. economy had a big second quarter, are the americans feeling the improvement. we ask the chief of white house advisors. and the consider conditions on, or facebook or the market took one on the chin today, and it could get even worse tomorrow. isle tell you what spooked investors and show you how it may hurt your portfolio. plus wildfires are costing billions. and squeezing the middle class is not just a problem here in the united states, the situation is not much better across the pond. we'll show you how much of the british middle class is living paycheck to paycheck as well. "real money."
2:01 am
♪ >> this is "real money," you are the most important part of the show. tell me what is on your find by tweeting me or hitting me up on facebook. stocks got slacked big time today. the dow jones plunging almost 17%. in a moment i'm going to tell you -- i'm going to help you figure out what if anything you should do about this. but first some more facts, the dow's drop wiped out all of its gains for the year. but the dow is just 30 stocks. but many of you for good season have your investments tied to the broader s&p 500.
2:02 am
the s&p had an even bigge percentage drop. losing a full 2% drop. that's the first monthly decline it has had since january. the okay news is the s&p 500 is still up 4.5% for the year. that's actually a little below the long-term average for this point in the year, but it's okay. many of you probably also own technology stocks like google or facebook. they are part of the nasdaq. that's also the worst drop since april, but like the s&p 500 the nasdaq is still up for the year. text stocks are often more volatile than the broader market and exaggera exaggerated. the question is why this happened today, and i'm here to tell you there is no simple answer. some of it has
2:03 am
to do with so-so corporate earnings, argentina's bond default, while it is of limited impact didn't help, nor does the fact that the s&p has doubled in the last five years and is probably due for a pull back. and let's look ahead, and by ahead, i mean all the way to tomorrow morning. that's when we get the government's count of how many jobs were created in july. that could have a big effect on what happens with stocks, because a huge number may mean that the federal reserve will think about raising interest rates faster than hoped for, and that could cause investors to sell stocks. but even more important than the number of jobs is the information we get tomorrow about wage growth. and here to explain why is erin gibbs. erin good to see you.
2:04 am
>> good to see you. >> people have been asking why did this happen? and there are a b in of reasons? >> yeah, and europe has been down for weeks, and that has a lot to do with the ukraine crisis as well. so there are so many reasons, but the biggest catalyst is the fed. >> all right. we got a report today the employment cost index. it's interesting to some people. the cost of employment has gone up a little bit. that doesn't jive with what my viewers think about wages. >> yes, we have been con enthly seeing about 2% wage growth. but what we're really concerned about is if it goes above 2% growth. yellen and the fed has v been looking for 3% to be a sign of healthy inflation. >> right. >> and that's what we're really looking for tomorrow is to see
2:05 am
if we start seeing wage growth above 2%. >> we have overcapacity in the labor market. and another way to say that is that a lot of people are unemployed and under employmented. and until that picks up, we're not likely to see wage growth. now? >> because so many people have dropped out of the labor market, and that's why we're seeing such lower unemployment numbers. >> right. >> and we're starting to see a slight inkling of we are getting close to full employment. and that's when the wage growth really starts. we start to see those pressures. >> how do we square that with what people want? they want higher wages and sometimes businesses want higher wages because it buys things -- people that pay taxes -- we know fully half of this country feels a little
2:06 am
wages. >> wall street wants wage growth too. wall street and main street are very much on the same page on this. the stock market did take a hit because it is natural that we could see some short-term pullbacks because of inflation, but ultimately, wage growth and healthy inflation is good for everybody. that means we have a growing economy and therefore markets will rise. it's just right now we're seeing a bit of that transitional income. >> what could my viewers think about the stock market and what to do about it? we have had people saying maybe it's a little frothy it might be time for a pull back, or no, j it's good. and bob schiller said this market could be ready for a fall. what do you think? >> for us we have seen it
2:07 am
as -- i don't want to see lofty, but it's definitely at the top. not to get too technical, but basically it's trading at about 16 times earnings, which is the peak of where it hits for the past five years. and then it evens out. so we could see prices go down, but ultimately if earnings go up, we could still see prices go up with those earnings, and that's exactly what we're seeing in predictions so that corporations are making money, profits are increasing, we're looking at 10% increase in profits over the next year, so we could see the market go with that. but that doesn't mean we're going to have these ebbs and flows in between. >> and when the market is lower priced according to earnings then you have to have a good reason for a 200-point drop in the dow, but when the markets are maybe lofty there could be other reasons.
2:08 am
in other words i worry about it a little less when we're in a lofty market. >> absolutely. underlying fundamentals are good. >> erin gibbs thanks for joining us. up next, gaza's tunnel vision. millions have been spent on building those tunnels, but was the money and concrete diverted from their real purpose, helping the people of gaza. and the wildfires in the west are burning the budgets of western states. that story and more as "real keep it here. ♪ >> investigating a dark side of the law >> they don't have the money to puchace their freedom... >> for some...crime does pay... >> the bail bond industry has been good to me.... i'll make a chunk of change off the crime... fault lines...
2:09 am
al jazeera america's hard hitting... >> they're locking the door... ground breaking... >> we have to get out of here... truth seeking... >> award winning, investigative, documentary series.
2:10 am
♪ israel's military offensive in gaza pressed on today, but the united nations and united states just announced that israel and hamas have agreed to a 72-hour ceasefire. earlier today, israeli prime minister benjamin netenyahu called an additional 16,000 reservist up for duty. so far the death toll on the palestinian side has crossed the 1500 mark. the overwhelming majority civilians. meanwhile netenyahu vowed to
2:11 am
destroy the underground tunnels used by palestinian fighters used by hamas and other factions with or without a ceasefire. gaza has already suffered from staggeringly high rates of poverty and one of the highest population densities in the world. fully 60% of gaza's 1.8 million residents are registered ref fees from past israeli wars. some of the rockets being fired from gaza into israel are aimed at places those refugees once called home. israel has maintained a tight, air, sea, and land blockage on gaza. that's exactly when hamas seized control there. economic output in gaza fell to just $403 per person in the first three months of this year.
2:12 am
if economic output, if that $403 a person were 20 times as much, gaza wouldn't even be considered a developing economy. output per person in the united states for comparison was $53,000 a person last year. even this pull try economic output is taking a hit with all of the destruction being visited now on gaza's already meager infrastructure. and unemployment rose to 40.8% in 2014. fuelled in part by a decline in outside assistance because nothing gets in to gaza and falling tax revenues as a result of israeli's blockage. to cope, hamas and others have built tunnels to smuggle goods from egypt into gaza. the israelis have charged hamas to smuggling will rockets too.
2:13 am
israeli's initial justification for launching its offensive on july 8th was to degrade hamas's rocket capabilities, but now it has turned to an expanded infrastructure of tunnels that hamas and others have built into israel itself. as mary snow reports, these tunnels may represent as much as $90 million gamble for hamas. >> reporter: tunnels are nothing new in gaza. a tunnel was used in the 2006 abduction of an israeli soldier held prisoner for five years. he was later exchanged for 1,0237 palestinian and arab prisoners. tunnels have been used for decades to smuggle goods to and from egypt. gaza is blockaded on all sides by israel and egypt and has one of the highest unemployment rates in the world, and the
2:14 am
supplies. >> you have literally hundreds of tunnels, and you kwould go to southern gaza and see them every few feet. and an awful lot of gaza's every day life comes through those tunnels. but when morsi was over thrown in 2013, the fortunes of hamas declined rapidly. egypt cracked down on the illegal tunnelling. hamas has created a new set of tunnels aimed at israel, but unlike the egyptian tunnels used mainly for commerce, these are designed as military weapons for cross-army attacks. the israeli army says hamas used
2:15 am
the tun else four times in the past week. some of these tunnels are a mile or more into israeli territory. the israeli military claims that the concrete use for these tunnels was intended for civilian structures. hamas hasn't responded to the israeli accusations. >> now what we saw in gaza was the development of a massive tunnel system. perhaps 25,000 employees -- you will see entire streets that are industry. >> reporter: estimates from the israeli military and others are that each tunnel could cost hamas anywhere between $75,000 to $3 million to build. and with potentially as many as 50 tunnels already built in the sandy soil beneath the border, some assessments put the total
2:16 am
cost to hamas between 30 and $90 million, some of that money may have come from foreign donors and other sources. >> hamas essentially runs the government in gaza, it charges customs duties on goods smuggled in from egypt. >> reporter: the millions spent on the tun else signifies a serious financial gamble for hamas at a time when according to the world bank a significant portion of its population lives very close to the poverty line. mary snow al jazeera. all right. here to help make sense of how the tunnel situation is playing out in the conflict is rex ryan, professor of political science in montreal. he has written a number of books on various aspects of security in the middle east. he has spent time in gaza examining the tunnel phenomenon.
2:17 am
and you recognize rex because he was in mary snow's story. thank you for joining us. >> good to see you. >> the israeli army is quoted as saying there may be as many as 50 or 60 tunnels, and the argument is these material used to build these tunnels are diverted from materials intended to help the gau san population. and hence it's why concrete and other materials are part of the blockage. is this true? >> couple of points on that. first we have to distinguish of the 50 to 60 very few go into israel. most of those are tunnels from part of gaza to part of gaza for defensive purposes. the concrete comes from a variety of sources. some was allowed in by israel. a far larger volume was smuggled during the heyday
2:18 am
of the smuggling phenomenon. and there's a huge concrete recycling industry in gaza. so the concrete that hamas used probably came from multiple sources, but there is a private strip. >> you have argued there is an entire so-called tunnel economy in gaza. tell me about that. >> absolutely. at the heyday we had hundreds of tunnels operating at any one time. we had the smugglers, the diggers, the people who provided the stuff, and this is a perverse consequence of the israeli blockage. what the israeli blockage did was forced gazans to dig in order to import goods. that creates a massive industry which made it easier and cheaper for hamas to dig tunnels.
2:19 am
there's very, very high unemployment rate so wage costs are low, so hamas does not have a great deal of difficulty finding expertise in tunnelling. >> where is the money coming from for these tunnels? this >> for the military tunnels that is clearly coming from hamas. hamas has seen a real hit in its finances in the last year or so, partly because of the closure of the smuggling tunnels. so they don't have the financial resources they had a year or two ago. but equally hamas sees this as part of its defense budget as it will. it doesn't buy aircraft or much artillery, it digs tunnels. >> but at g dp per capita of about $400 a person, is this coming from money from outside of hamas?
2:20 am
>> some of it is, but i think domestically. if this war ends with no relaxation of the blockage i think a lot of gazans will say look at the cost, it wasn't worth it. if hamas wins the relaxation of the blockage, i think many will think it was well worth the cost of the tunnels and the war. >> some of these tunnels will pretty elaborate. and some go hundreds of feet, possibly up to a mile. how does that even happen. how does israel not know that a tunnel is being dug under it? >> it gets harder to detect a tunnel by certain means depending on the depth. you can use ground penetrating radar, and hamas typically does not big out the exit of the tunnel until they are ready for attack. so there is nothing evident
2:21 am
until hamas tunnels up to conduct an attack. it is probably also the case that the israelis did not take the tunnels serious enough. and now they see the sere usness of the situation. >> do the ones into israel -- are they there because israel? >> no, there are entirely for military purposes to give hamas some capacity to strike at israel. >> thank you for joining us. welcoming up next, stocks in wartime a look at what is happening now to shares of company that trade in israel and palestine, and what the prospect of peace could mean for
2:22 am
>> an american tonight investigative report >> i never would have thought this would happen to us >> athletes going for the gold >> i've had a lot of people ask me... why didn't you scream?... why didn't you yell?...kick... why didn't you go tell your mom? >> betrayed by those they
2:23 am
believed in the most >> there's bad people out there in youth sports >> could this happen to your child? >> my sole purpose in coming forward, is to help change the culture of sports >> an america tonight investigative report only on al jazeera america ♪ israel's main stock index as gained a modest 2% in trading since the start of the offensive in gaza on july 8th. the tel-aviv trades stocks at a value of more than $200 billion. and the main tel-aviv 100 index has ticked up 1.2% this year. it's more than the dow but less than the s&p 500. palestinians have their own stock exchange in the west bank. it trades with a total market cap of just $3 billion. while the palestine 's exchange
2:24 am
has gained slightly, it is actually down 6.3% for the year. john kra is at c&p capital iq. diop, good to see you. >> thank you. >> often when we're dealing with these crisesess specially when it involves human casualties, it gets a bit crass. we all know israel has an economy. they focus a lot on r&d and high-tech and they have some of. >> sure, [ inaudible ] pharmaceuticals, one of the top pharmaceutical companies in the world. a major competitor on the international sage. especially with the united states, swiss, and german pharmaceutical companies.
2:25 am
when you look at israel overall, they are on a track that is completely in contrast to where they were 20 or 30 years ago. >> and unlike most countries who have been at war -- it's not a defense centric economy. >> no, that just happens to be a result of their wonderful and deep research and development. they have been developing weapons for years, but more importantly, apart from the scientific developments for defense. you have harm -- pharmaceutical companies that are major competitors worldwide. >> gdp capital in gaza is so small, as to bare no comparison. the west bank is getter off than gaza is. >> for sure. and as you rightly pointed out. there is a blockage on the hamas-operated side in gaza. they can't get goods and services in and out. gaza should be a thriving port for the palestinians.
2:26 am
they should be transporting back and forth between israel. it should be a must faster growing area. but because of the hostilities and because hamas does not want to give up, it is not going to happen for either the west bank for them. >> it's sort of a chicken and egg situation. >> yeah. >> the catalyst has to come from somewhere for a better economy. i mean in fairness these gazans don't look like they have much to lose at this point. >> exactly. and that's all the more reason that they should be focused on economic development as opposed to the insurgency. >> what could happen on the market side? what is the genesis? look at the formation of israel and the west bank where there are universities and sort of an ongoing heritage of people university educated.
2:27 am
in gaza education is harder to get. >> the political split between hamas and the more democratic rulers in ramallah is the problem. they have to get hamas out. and that's really the only way gaza is going to catch up with the west bank, and of course in israel. >> are there companies listed on the palestinian side that have the ability to compete with these israeli companies? >> not yet. infrastructure. >> and that's good. >> fwlooutly. >> if you look at a place like gaza, if something were to infrastructure. >> absolutely. and they don't need the tunnels. it's clearly -- they should be constructing homes for people. they should be -- they -- they should be constructing industry. it didn't help that their -- one
2:28 am
of their power plants got knocked out during the battles, but at the end this is what they need to be focusing on. they need to become competitive economically and not militarily. >> john thank you for joining us. coming up climate change that has the cost of fighting wildfires burning through budgets faster than ever. >> there is a tendency to downplay human rights in favor of commercial interests >> harsh realities of a world in crisis >> governments care about their reputation... >> can roth, head of human rights watch >> with adequate pressure you can stop anybody's abuse. >> every saturday join us for exclusive, revealing, and surprising talks with the most interesting people of our time. >> talk to al jazeera only on al jazeera america
2:29 am
>> al jazeera america presents a breakthrough television event.
2:30 am
borderland. six strangers. >> let's just send them back to mexico. >> experience illegal immigration up close and personal. >> it's overwhelming to see this many people that have perished. >> lost lives are relived. >> all of these people shouldn't be dead. >> will there differences bring them together or tear them apart? >> the only way to find out is to see it yourselves. >> which side of the fence are you on? borderland, sunday at 9 eastern, only on al jazeera america. there's a new development to tell you about involving a tanker of kurdish oil off of the coast of texas. today we got another clue about the buyer behind this mystery shipment. for more on this let's go right to heidi zhou castro in dallas. heidi? >> so we know this buyer who has purchased this kurdish crude in the past has not said that they are actually the buyer for this
2:31 am
shipment per se is lindel basso. they have purchased two shipments from the kurdish government in may, and it says it has not broken any laws, but it has canceled any future transactions. so what still remains unclear is what happens to this one million gallons aboard this vessel. we heard from the kurdistan regional government that that has been legally sold. however, payment normally for these kinds of things isn't exchanged until 30 days after delivery. well the oil has not been delivered and most likely will not be delivered thanks to a warrant signed by an american federal judge in texas who has authorized the seizure of this cargo. right now it is sitting 70 miles
2:32 am
offshore since this weekend. and the u.s. marshall says it is monitoring the situation, and if that ship comes within 12 miles of the coast that's when marshals can board and confiscate the cargo, ali. >> thank you for that. the western united states is on fire. five new blazes have flared in the pacific northwest in the past few days, and washington state's largest-ever wildfire continues to burn east of seattle. hundreds of thousands of acres scorched. millions of dollars in property damages. last year the federal government spent $1.7 billion in fighting fires and the cost is expected to rise this year, and according to a new report as fires get hotter and bigger, we're burning through our fire fighting budgets faster than ever.
2:33 am
patricia sabga has the story. >> reporter: whipping winds and hot dry conditions can cause a wildfire to spread miles in just hours. add to that one of the worst droughts in the history of the west, and a rise of temperatures in the last century, and we have what experts say is a costly combustion. >> we have seen $1 billion every year since the year 2,000. and in many of those years it has reached nearly $2 billion. >> reporter: rachel is one of the coauthors of this paper that find thats that the cost has increased by more than 75% in the last decade. fires are now destroying twice as many acres in a season that has grown on average two months
2:34 am
longer since the 1970s. states pay 1 to $2 billion annually as well. >> and what is more, this is just the tip of the iceberg. because the costs include damage to property, health costs, damage to infrastructure like power lines and roads. those being two to 30 times the suppression cost of fires. >> reporter: the growing number of homes being built in high-risk areas, only adds to the mounting costs of wildfires. insurers have are paid out almost $5 billion in losses in the last decade. but perhaps costliest of all, as wildfires have grown larger more intense and more frequent, the federal budgets to fight them haven't kept up. that has forced the forrest service to pull billions from
2:35 am
other areas to deal with the expense. those funds often coming from programs aimed at preventing future forrest fires. >> we're basically robbing peter to pay paul. >> we have seen record wildfires. we're having to spend more money fighting fires now than ever. >> reporter: president obama has suggested we change the way we pay for wildfires. the cost for fighting the biggest disasters would be paid for through a special relief fund operated by fema. >> these are fires that are bigger. they are hotter. they are more damaging. and they act like a wreckingball pounding at the rural west. >> reporter: bipartisan legislation has been introduce
2:36 am
in both the senate and house, and can climate forecasts of hotter and drier conditions, wildfires are expected to increase over 100% in areas of the western united states by 2050. experts say quick action needs to take place before our budgets burn beyond control. patricia sabga, al jazeera. many western states have experienced some of their largest wildfires in recorded history. jim douglas oversees the department of the interiors wild land fire budget says finding a better way to pay for these costs needs to become a serious national priority. jim good to see you. thank you for being with us. >> you're welcome. >> going back to the issue of development in fire zones. the union of concerned scientists report found that there are 1.2 million homes at an estimated value of almost
2:37 am
$200 billion at high risk of wildfires. we're pushing homes closer a and closer to risk areas largely because it's lucrative to do so. >> any time we have homes at risk, it dramatically increases our fire fighting costs. our job is to manage and protect our lands, and that should be our primary mission, but when we have houses and development butting up against our lands it situation. >> and some have suggested that if county governments were to start sharing the fire fighting bill, they would have a different situation to consider. >> i think everybody ought to pay their fair share, and people who live in those
2:38 am
areas ought to bare the cost. we should expect people help as well. >> it's a national issue by virtue of what you are talking about, the fact that this is for. >> we have fires all around the country. right now it's the west that gets the focus. but it really is a national problem. those forrests and parks and ranges that we manage, those are the people's resources and when we lose those to large destructive fires, everybody loses. and the cost that we pay, everybody loses. >> what do you think of the president's proposal that we have a fema
2:39 am
structure that pace for these things? >> that's a good thing. because about 99% of our fires cost about 70% of our budget. so it's that last 1% of the budget of the fires that are a huge amount of our budget. and that's the same as a major earthquake, hurricane, or flood. so we believe the president is on the right track by saying let's treat fire the same way we treat other natural disasters, and they ought to be treated the places. >> and what do you think happens if we don't do anything at this point. you do have a budget, you do fight these things. i know it costs you more. is there a consequence? >> no, so i think it's -- it's -- there's a couple of prongs to the solution. one is we know that 99% of the fires -- 70% of our budget, we don't know when and where those fires will happen, but we know we're going to have to fight
2:40 am
those, and we're prepared to budget for those. so if we have to keep paying for those on top of, that means we either borrow money from other programs during the year, or don't pay for other things in the future. >> yeah, it's a hard topic, because it doesn't effect everybody. >> that's right. >> so it's hard to bring this to the forefront, so i thank you for joining us to tell us more about this. it involves us all even if we're not in the forrest fires. coming up next, they say the grass is always greener on the ore side. we're going to apply that theory to the other side of the pond and compare britain's middle class to america's.
2:41 am
2:42 am
>> this, is what we do. >> al jazeera america. ♪ the united states and britain have a special relationship. in fact winston churchill used the phrase the exceptional relationship to describe the close relations between the united kingdom and the united states.
2:43 am
now i want to look at that relationship through the prism of the struggle of the middle class. it is not just in the u.s. where the middle class has become a hot political topic. >> this will put a tax on your pension. >> the squeezed middle here is very similar to the middle class as politicians in the u.s. refer to the middle class. >> reporter: jonathan is the director of the london-based national institute of economic and social research. >> people in both the working and the middle classes have had quite a hard time of it in the uk. people who have got jobs but don't necessarily have a huge amount of job security, aren't earning a lot, feel quite hard pressed by taxes, insecure employment and by not seeing their wages going up by much.
2:44 am
>> reporter: about 50% of britains are living paycheck to paycheck, compared to estimated 75% of americans. their medium is $75,000. in the u.s. it's $51,000. that may seem to put the brits at an advantage but it actually puts them into a 40% tax bracket, as opposed to 25% for most u.s. taxpayers. >> it has been a tough time for the middle class, and some of those difficulties started before the downturn. >> reporter: she is the executive chief executive of an independent think tank that produced an in-depth report of the british middle class. >> what we have seen is significant falls in real wages and cost pressure coming from things like food and fuel. so a real squeeze on household budgets. >> reporter: average hourly
2:45 am
wages in the uk have slumped by 5.5% since 2010. >> we have seen a phenomenon that has been true in the u.s. for quite a long time. that is stagnating real wages for seem in the middle and lower middle of the income distribution, but it's a bit of a shock here. it's only in the last five years that we have seen these falls. >> reporter: london has become unaffordable to the middle class. in fact the average asking price for a property on sale here. $779,000, u.s., and that's up 17% over the last year. a sky high climb but still not as steep as the average price of a home in san francisco, $1.4 million, or new york city, $1.7 million. and the middle class in the uk are faring better in other areas too. britains pay an average of $5,600 a year on transportation,
2:46 am
americans pay close to $9,000. but financial experts say it's only a matter of time before britain catches up to its cousin across the pond. >> in many ways in economic and social materials, the uk seems to be sort of following the same pattern as the u.s., but maybe 20 years behind. >> it's better to be rich in the united states and poor in the uk according to the chief commentator for the financial times. he has written extensively on the plight of the middle class, including his award-winning story "the crisis of middle class america." so i'm having him talk about the polite of the middle class in the uk, which i know you have studied. edward joins us from chicago. tell us what this means? >> i think traditionally the rich in the u.s. have paid far lower taxes than the rich in the rest of the world.
2:47 am
the poor in britain and most parts of europe unlike here get free health care at the point of access. people pay in other ways through the tax system, but if you are poor you are not uninsured. if you are a citizen you get free health care. >> and i remember in the london olympics the opening ceremonies boasted of this health care. some will tell you it is not comparable to the highest level of paid for health care in the united states but everybody gets it and it's pretty good. >> yeah, if you have a difficult disease, a rare disease, a hard to treat problem, the best place to be is here. on average stuff, as long as you are prepared to wait in line, then it is better to be poor. it's probably better to be middle class too in britain. >> and in fact part of that is
2:48 am
that you have working class communities in great britain as a class unto themselves because they do not have the same desperation. they are poor. they are probably not going to achieve the next step towards after flew wednesday, but you can exist because of health care and free education. >> and education. britain has had considerably more austerity in terms of public spending than the united states in the last four or five years. not all of public education is free anymore. the cutoff point at which you have to pay for higher education has been lowered. more and more of the nation l a health service is imposing charges. so the direction in britain isn't by most people to be considered a very good one. and the direction here, by contrast, you have 10 million people or so people who have
2:49 am
insurance who didn't used to have insurance because of the affordable care act. so direction is also important. >> is the political discourse as it surrounded austerity or greater spending the same in the uk as it as polarizing as it is in the united states? >> no, it isn't surprisingly. you have a coalition government there, conservative and a liberal democrat that has by and large pushed through cuts without the mass public demonstrations you would have expected in the past or you could get today, say, in france. and there's a broken census of -- you mentioned churchill of sort of blood sweat and tears that we're paying for our sins, from an economic point of view
2:50 am
it doesn't make much sense but from a moral sense resinates in britain. >> it is hard for somebody who maybe as a university graduate to -- to graduate and take up a job in london and actually live in london. property values are very high. cost of living is very high for basic things, obviously even when you think about gas and parking, but that's not what everybody does. is that challenge similar to the challenge you see in new york or san francisco or is it greater? >> i think in some respects if you are talking just about london, it's actually greater. the reason why i said in the past it would have been better to be rich in the u.s. than the uk, is because in the last few years the tax breaks and for well think foreigners, whether they be from russia, greece, portugal, anywhere they are having problem around the world, you tend to find their millions
2:51 am
and billionaires buy properties in london. and if they don't spent more than 90 days a year in britain, basically they don't pay taxes. so they have pushed up prices. the solid middle class jobs that keep societies functions, you can't afford to live in london and probably can't afford to put london. >> edward thank you so much. the chief u.s. commentator at the financial times. coming up congress leaves town. and the house majority leader leaves his job. i'll look at the unfinished financial business left in washington. plus i'm explain the employment cost index and how it may have played a role in today's stock market selloff.
2:52 am
2:53 am
2:54 am
♪ some reshuffling happened up on capitol hill today, as eric cantor stepped down from his post, following his surprising loss last month when he was defeated by dave brat a relatively unknown tea party-backed opponent. until the loss cantor has been viewed as the likely successor to john boehner. cantor talked about the u.s.'s diminished role on the global stage. he will remain on the hill until his term ends in january. congress meanwhile is gearing up for its five-week summer recess that kicks off tomorrow, and despite a rush to get some bills past, there is still a lot of unfinished business left on the table. they canceled this afternoon's vote to address the border crisis. joining me to talk that and more
2:55 am
a is chief political strategy, joining us from colorado springs. greg great to see you, first of all. what are the implications of a change at the top of the republican leadership right now? because from the perspective of most americans congress is not all that important to their life. important? >> maybe a little more important, ally. and great to see you as well. inside the beltway the departure of cantor has some real implications. number one he spent too much time with pro-business lobbyists. and he talked for much of this year about being more conciliatory on issues like immigration. well, that didn't get him very far, did it? and the conservative republican base wants somebody in his place who is a little more boehner. >> is
2:56 am
kevin mechanccarthy going tobe that person? >> it is thought so. he and many republicans were lukewarm on any immigration reform bill. and a lot of budget issues. that will be put off until september or december. >> let's talk about things like the export, import bank, a lot of american companies depend on. they build goods to be sold to other places, who need the credit, we have the highway trust fund that is about to run out. this is serious business because we have infrastructure businesses in this country. but there will be a lame duck session, and the last time we had federal elections in this country, i think frustration was running at an all time high. is this the opportunity for republicans in particular to
2:57 am
come and say, we have real solutions. not just these suing the president and distractions. >> first of all i think there's a wild-card here, and that is if this economy continues to look better, let's say tomorrow morning we get 270,000 new jobs, i think the public is going to feel that things are getting better. and i think that will reduce the angst that we have seen in the last year or so, and the electorate may get less volatile. and there's a really remarkable phenomenon going on in that many republicans are not probusiness. they don't want found the xm bank, and fund infrastructure. so it's very odd bedfellows right now, but the big overriding point in my opinion is a significantly improving economy that could effect this election. >> which is going to be
2:58 am
something republicans are not going to want focus on. so which do you think they will focus on. obamacare, hire wages, immigration or foreign policy? >> foreign policy now has become a big issue, and i think there's a growing feel that this administration has not distinguished it's a in that field. but i think obamacare is still a big issue for a lot of small business owners. it will drive turnout in a lot of states for g.o.p. candidates. >> greg always a pleasure to see you. every three months the labor department puts out something called the employment cost index. this represents the broadest measure of pay and benefits that americans get from their work. we learned today in the three months ending in june, the cost
2:59 am
of workers to employer rose by 7.1%. that's the cost that employers pay out to their workers. less than 1% may not sound like much, but it is the biggest rise since we have seen since the dark days of 2008. we told you on this show that more jobs are being created every month. more than 200,000 jobs each month. now that's good, but since the recession, the growth in wages has been stagnant, which isn't good. many economists have blamed that on low-paying jobs being added to the job market. so today's employment cost report is the first sign that good new wages are coming for many economists. we'll get to confirm more of that when july's numbers come out tomorrow. that's another clue in this critically important issue.
3:00 am
that's our show for today. i'm ali velshi. the people of gaza venture out in to the streets as a ceasefire takes effect. israeli soldiers are still dismantling gads a's tunnel network. we ask hamas with whether their fighters can hold fire. ♪ ♪ hello, welcome to al jazerra life from our had you had quarters herheadquarters herein. ray series of mass i can explosions in taiwan leave 25 dead and hundreds more injured. and building new treatment